Energy and natural resources notes from South America

World fuel prices – how does South America stack up?

The always excellent Armin Wagner of GIZ, the German aid and development agency, has assembled his annual list of fuel prices around the world. It’s a “snapshot” of gasoline and diesel prices in November, 2010. While those in Europe get to nitter and natter over whether ’tis better to be as Romania, at 146 U.S. cents a liter ($5.52 a gallon), or like Turkey, at 252 cents ($9.53 a gallon), we in Latin America have other issues to deal with. One is how to get hundreds of millions of poor people into a better quality of life without converting this paradise of a continent into a smoldering ruin, a la China. Another is how to reduce the plague of smuggling while respecting that countries have the right to subsidize whatever they want, including fuel.

8 thoughts on “World fuel prices – how does South America stack up?”

The red one should have read “gasoline cheaper than water”.
I told people in Europe: “do you know petrol is cheaper tha water in Venezuela?” and they went: “whaaaaat?”
I then went to Venezuela and said: “do you know what people in Europe said when I told them petrol is cheaper than whater here?”
“No”.
“Quéééé?”
“En serio? Jajajajaja. Qué vaina esa Europa!”
Then I came back and told people:
“Do you know what Venezuelans said when I told them you said “whaat” after I said…”
I stopped it there to avoid an endless awe loop.

Smuggling has been a civil right in Venezuela since at least early August 1498. And hundreds of thousands of people live off it in Zulia, Táchira, Apure, Amazonas, Bolívar, Sucre, Delta Amacuro and Falcón.

Isn’t mineral water more expensive than gasoline in most parts of the world? I’m guess that’s what we’re talking about, because tap water costs nothing in most places (or at least that’s what I’ve always paid for it). I think you can easily pay more than $1 per liter for mineral water in the US, and probably in Europe, even without buying that ridiculous Fiji water. Truth is that bottled water is about as big of a scam as Venezuela’s fuel subsidy, but I suppose that’s a post for a different blog …

It is interesting how the SA country with the fastest growing economy has the highest cost automobile fuel and 3 laggards–Bolivia, Ecaduor and Venezuela–have the lowest cost fuel.

One can easily argue how high excise taxes on dirty fossil fuels contribute to maintaining or increasing valuable public assets like air quality, public roads, public health. And, of course, it is not surprising when Nordic and many other socialist countries impose steep excise taxes. So what is different about South American socialism?

Ah yes, setti you provide part of the answer. Latin American socialists have an innate right to promote bad policy (just like their richer American counterparts).

“Another is how to reduce the plague of smuggling while respecting that countries have the right to subsidize whatever they want, including fuel.”

For fun, I changed that to:

“Another is how to reduce the plague of smuggling while respecting that countries have the right to ” pursue bad social policy, which in more detail reads like …. to use public policy to transfer rents in the form of subsides to the most politically deserving, and to emphasize myopic, quick-fix, purportedly generous, equity-oriented policies.

Perhaps that is not what you had in mind?

The essential problem is one of social cooperation and it goes without saying that sovereign nation states have to right to favour private gains over social outcomes or immediate gains over future welfare. For time being it appears that poorly cooperating citizens can elect populist socialist governments but these governments are generally incapable of fixing anything and advancing social cooperation.

Socialist visions for Latin America could use a good dose of Hernando de Soto’s property-rights oriented economic policy if they are at all serious about attaining the material standards and safety of the Nordic social democracies. Better property rights and capitalist institutions are required to attain socialist objectives such as well-financed, sustainable social welfare safety nets.

Off my soap box. Thanks for a fascinating chart and data source. Much appreciated. -w

“Nordic and many other socialist countries impose steep excise taxes”
Other socialist countries? Sorry, I did not get that. Which ones are you talking about? There is North Korea…there is Cuba…did I miss something here?
What socialist countries appeared since yesterday?
I haven’t seen other socialist countries for years now.

China is still socialist. The economy is still very much command and control though market reforms have decentralized power. The USA has long been socialist, just with different priorities. In fact, the USA did manage a command-and-control economy rather well during WW II. As a result of that experience and some Liberal revisionism, many North Americans strongly believe in the power of discrete fiscal stimulation. I guess the hard, painful truth that Americans could be just as good or better “communists” than the communists themselves was too hard to swallow during the Cold War period.

Unfortunately, nobody has today’s believers in the magical powers of discrete fiscal stimulation that governments must mix in a good measure of top-down command-and-control policy to make discrete fiscal stimulation actually work.

Zionism was originally socialist. The movement may have transformed into something else but Israel considers itself a social democracy. The state is powerful and is omni-present in the economy and all resource allocation issues.

Keplar, if you have run into many South Americans who wish to emulate the totalitarian regimes found in North Korea, China, former Albania, the former SU, or Cuba, please share. My information dates a little. The former urban guerrillas (Monteneros, Maoistas) I chatted up in Argentina seemed to all think that the Swedish or Nordic model looked better than others. So did many others with less impressive political credentials.

The South American revolutionary (sic) socialist regimes tend to be authoritarian, populist and interventionist but not totalitarian. Crony freemarket capitalism endures.

Why I’m here

I'm Steven Bodzin, a freelance reporter and investigator. I have lived in Chile, Venezuela and the US and am now based in Montreal. You can see my paid work here. I continue to follow South America and I'm especially interested in corruption in the energy industry. Here, I share some of the sights, experiences and half-baked thoughts that I am not sure I'll ever get paid to publish, or little leads that might help attract new sources. If you know more about any of these stories, please share. You can contact me at settysoutham@gmail.com.